Question # 1

According to Marshall the basis of consumer surplus is.

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Law of diminishing marginal utility.

Law of equal marginal utility

Law of proportions

All of the above

A decrease in autonomous consumer expenditure causes the equilibrium level of aggregate output to __________ at any given interest rate and shifts the ___ curve to the __________

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rise ; LM ;right

rise ; IS ; right

Fall ; LM ; left

rise ;IS; Left

A decrease iin money demand other thing equal shifts the _____ curve to the

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IS ; right

Is ; Left

LM ; Left

LM ; Rfight

In economics money refers to

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Income

Wealth

Assets use and accepted an payment

Currency

During period of inflation

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Those people who have fixed incomes benefit

Every one's real income falls

those people who enter long term wage agreements benefit

Those people whose real income rises faster than the general price level benefit

Fiscal policy refers to.

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The actions of the central bank in controlling the money supply

The government's altitude to taxation

The spending and taxing policies used by the government to influence the economy

The governments regulation of financial intermediaries.

When a nations money supply is Rs.1200 billion and the nominal Gros National product is Rs.4800 billion the velocity of money is.

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0.25

4

0.4

Rs.4 billion

There are _______ major instrument of monetary policy.

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Three

Four

Five

None

As the interest sensitivity of money demand increases

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The multiplier term increases

Fiscal policy has a greater effect on output

Monetary policy has a smaller effect on output

All of the above

Fiscal policy is purposeful movements in _____designed to direct an economy

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Interest rate

Legal structures

Government regulations

D Government spending and taxes

A decrease in fully autonomous investment other things equal shifts the ______ curve to the

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IS ; right

IS ; Left

LM ; Left

LM ; right

A shift in tastes toward foreign goods ______ net exports and causes the IS curve to shift to the

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decreases ; right

decrease ; left

increase ; right

increases ; left

The largest source of tax revenue for the federal government is.

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The personal income tax

The social security tax

The property tax

The sales tax

If the original money supply is MSo and the original demand for money is MDo then

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The equilibrium interest rate and savings are 5% and 50

The money supply is 200 and equilibrium income is 500

The equilibrium interest rate and income are 5% and 600

The speculative demand is 25

What's the most common way for a central bank to reduce the money supply.

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Collect higher taxes

Sell bonds to the public

Buy bounds from the government

Buy bonds from the public

A decrease in fully autonomous investment other things equal shifts the ______ curve to the

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IS ; right

IS ; Left

LM ; Left

LM ; right

If the demand for money increase relative to the supply of money

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Interest rates will trend upward

Interest rates will trend downward

Interest rates are not affected by increases in money demand

Interest rates will behave randomly

According to classical models, the level of employment is determined primarily by

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The level of aggregate demand for goods and services

Prices and wages

Government taxation

Government spending

The purpose of financial intermediaries is.

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To allow more saving than investment

To discourage consumption spending

To collect income taxes for the government

To serve are middlemen between savers and borrowers.

An expansionary monetary policy

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Reduces interest rates

Increases real output

Shifts the LM curve to the right

All of the above

A Political problem with discretionary fiscal policy is the.

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Contractionary bias

Big state bias

Expansionary bias

Over reaction bias

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